Tag: SARS

The South African Revenue Service (SARS) has said that it will soon provide some much-needed clarity on the tax implications for transferring and purchasing Bitcoin and other cryptocurrencies. They have advised that traders should declare in the meantime if they need to.

eNCA spoke to SARS about the ever-growing use of cryptocurrencies in the country. While SARS is treating cryptocurrencies as part of Capital Gains Tax, head of SARS tax research Randall Carolissen said they are still exploring it further.

“Because by the very nature it lends itself to money laundering and anonymised trading, so yes we have to put in and place additional regulations. And to that end, we are going to release an interpretation note from our legal department to guide taxpayers as to their implications with respect to this Bitcoin technology,” Carolissen told eNCA

SARS revealed that it is also working with top global technology companies that are doing similar work regarding crypto and tax. With block chains being incredibly difficult to monitor, the deductions will depend on what coin is used.

“Since it’s not legal tender it is treated as an asset in your hands. And depending on your intent with this asset, it can trigger different tax instruments. It can either be a revenue nature or it could be an asset, capital gains tax in nature,” Carolissen said.”

“People need to come forward and regualise their tax affairs with us. And the guideline will also assist them with that. But as and when you submit your tax returns you must declare that as either additional income or additional asset revenue realisation that you’ve had. So it’s very important that you don’t discard that or ignore that part. Especially those people who took advantage of Bitcoin in the early stages.”

SARS has announced that it will intensify criminal proceedings against tax offenders from October.

In a statement released, the revenue collector warned South African taxpayers to “pay your taxes or pay the price”, after it had seen a large increase in taxpayers not submitting their returns within stipulated timeframes.

“We have noticed an increase in taxpayers not submitting their tax returns by the stipulated deadlines‚ and not settling their outstanding debt‚” SARS said.

“This is not limited to the current tax year but includes substantial non-compliance across previous tax years. It is for this reason that from October 2017 SARS will now intensify criminal proceedings against tax offenders.”

“Should any return result in a tax debt, it must be paid before the relevant due date to avoid any interest for late payment and legal action,” it said.

These punishments could include fines or even criminal prosecution, it said.

Late refunds

While SARS pushes to meet its deadlines, it has also recently come under fire for failing to issue refunds timeously.

On 4 September, the tax ombudsman found that SARS’ system had unfairly delayed payment of refunds to taxpayers.

The ombud said that the findings were not only based on complaints received during the previous tax year, but over the course of multiple years.

“In the period November 2016 to March 2017, we received no less than 500 such complaints; half of which were validated. While the number of complaints received is important, this is not necessarily indicative of the financial magnitude or impact of the problem because, one claim may run into millions,” it said.

“The impact of the withholding of refunds may be devastating to the taxpayer. What appears to be a small claim may have serious cash flow impact on that small taxpayer company, or an individual.”

In a statement in July, SARS said that it is important for taxpayers expecting a speedy payment to note that it has implemented additional risk processes in 2017, to ensure that both the legitimacy and accuracy of the refunds paid.

“SARS has an obligation to both taxpayers as well as to the fiscus to ensure that fraudulent and invalid claims are stopped,” it said.

“We are aware that taxpayers have an expectation that once they submit a return, which results in a refund, that this would be paid to them shortly thereafter. It must be noted that such refunds can only be paid once all SARS processes have been concluded.”

KPMG is struggling to survive and its recent restructuring and public pronouncements have not helped its cause either.

The hollow ring of the excuse proffered by KPMG interim chief operating officer, Andrew Cranston, that “we were only the doers” must be like a red rag to a bull for Pravin Gordhan and all those SARS employees besmirched by the KPMG SARS rogue unit report.

The destruction which this report has wrought on key management at SARS, its institutional reputation, and the long-term negative effects on our country’s economy might never be fully calculated. It would not be dramatic to suggest that in the long-term, KPMG’s complicity in this report might eventually cost South Africa hundreds of billions of rand.

The admission made by Cranston not only increases the culpability of KPMG in its overt contribution to state capture, but also brings into stark relief the fact that KPMG, both locally and internationally, seem unable to discern right from wrong and appear unable to grasp the concept of real contrition.

Since when was the trigger-man acting on behalf of a “client” not the “doer” in the committing of a hit and since when was the trigger-man not criminally liable?

But for the leaked Gupta emails, the partners of KPMG would have felt no guilt as they, like fat men at a smorgasbord, feasted on their annual partnership profits significantly increased by fees of dubious reports and questionable audits. And even now, as the extent of their malfeasance becomes more evident, they continue to resist with half-hearted excuses of “mistakes made and painful lessons learned”. Adding further insult to injury is the paltry R63-million in reparations which KPMG International has now offered our country.

To the partners of KPMG South Africa, that is simply not good enough. It isn’t good enough to offer a few sacrificial executive lambs and claim “but we didn’t know” and then speak of the importance of improving quality standards while hoping that the news cycle will move on.

As partners of KPMG, you cannot plead ignorance of the fact that your firm has conducted itself in an errant fashion and in breach of the Rules of Professional Conduct over a number of years – this was not a once-off mistake or an isolated error of judgement.

Perhaps it is too late now for KPMG’s South African operation, and if so, then what of its 3,400 employees and is KPMG too big to fail? Curiously, in the midst of the corporate crisis facing KPMG, the firm is clutching at every possible straw to justify its survival. Among these might possibly be the argument that they are too big to fail, which is as unconvincing an argument as the notorious “SARS Report”. The fact is that the statute requires that all companies are audited and it follows that volume of audit work will remain the same with or without KPMG. Importantly, not everyone at KPMG is unethical. If KPMG collapses then the great majority of competent and ethical staff of KPMG will find immediate and gainful opportunities in larger as well as mid-tier audit firms who will have to step up to fill the gap left by KPMG.

The collapse of KPMG might also provide a genuine opportunity to scale up a number of medium size audit firms, especially the “empowered firms”. The demise of KPMG will also help reduce the oligopolistic concentration of the large audit firms and will help promote more healthy competition within the profession.

It is true that the KPMG saga has shocked the SA business sector. But this is an interesting case of ethical destruction. After all, this is how a market economy should deal with its faulty and unethical firms. The case has also created a golden opportunity for SA corporations, and the business sector more broadly, to undertake a genuine and constructive recalibration of their ethical framework across all spheres. There is little doubt that all businesses could raise their ethical standards.

In particular, the collapse of KPMG should be a warning siren for the other audit firms to reassess their internal processes and their corporate governance mechanisms. This is vital for socio-economic development because in modern societies, underpinned by complex financial and economic structures, the audit firms play a unique and pivotal role in assuring that resources are used with probity and propriety. To this end, a number of measures need immediate consideration. For example, corporate SA should adopt the principle of “auditor rotation”, as importantly the audit companies themselves need to appoint non-executive directors with appropriate governance competencies; and external audit firms need to focus on audit work and avoid technical advisory work. Corporate finance advisory operations have no place within audit companies. The notion of “Chinese walls” within the audit firms simply does not work, as KPMG clearly demonstrates.

As often said, we should not waste a good crisis. The KPMG crisis should definitely not be wasted on the SA business and the country at large. The crisis is a stark reminder that our nation needs to re-examine the ethics of doing business, whether in the private or in the public sector. We have no time to prevaricate. Company directors, chairpersons of the boards, and members of the audit committees in particular need to act with vigilance and urgency. As Martin Luther King, Jr reminded us: “It is always the right time to do the right thing.”

The South African Revenue Service (SARS) has done over 100 inspections of “cash and carry” businesses in Gauteng in the past month, it said in a recent statement.

About half of the businesses inspected did not comply with SARS’ rules regarding registration, filing or payment.

“SARS is closing in on those who under declare on their tax liability, both individuals and companies. We encourage all taxpayers to ensure their affairs are in order and they are contributing their fair share towards the cost of running the country,” says commissioner Tom Moyane.

The inspections of cash and carry businesses had seen several audit cases concluded, raising tax assessments for the past financial year by more than R600-million.

“There is a significant risk of under declaration due to poor record keeping and high volumes of cash transactions in this sector,” SARS says.

Registrations were now being conducted, with follow-ups on outstanding returns, collection of outstanding debt and further risk profiling for full audits where there was evidence of under declaration and collection of outstanding debt.